West v. Access Control Related Enterprises, LLC

CourtSupreme Court of Delaware
DecidedApril 13, 2023
Docket230, 2022
StatusPublished

This text of West v. Access Control Related Enterprises, LLC (West v. Access Control Related Enterprises, LLC) is published on Counsel Stack Legal Research, covering Supreme Court of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
West v. Access Control Related Enterprises, LLC, (Del. 2023).

Opinion

IN THE SUPREME COURT OF THE STATE OF DELAWARE

WILLIAM WEST, § § Plaintiff Below, § Appellant, § No. 230, 2022 § v. § Court Below: Superior Court § of the State of Delaware ACCESS CONTROL RELATED § ENTERPRISES, LLC, LLR EQUITY § PARTNERS, IV, L.P., LLR EQUITY § C.A. No. N17C-11-137 PARTNERS PARALLEL IV, L.P., § SETH LEHR, an individual, § DAVID STIENES, an individual, § GREG CASE, an individual, § ROBERT CHEFITZ, an individual, § and JOSEPH GRILLO, an individual, § § Defendant Below, § Appellee. §

Submitted: February 22, 2023 Decided: April 13, 2023

Before SEITZ, Chief Justice; VAUGHN and TRAYNOR, Justices.

Upon appeal from the Superior Court. AFFIRMED.

Geoffrey G. Grivner, Esquire, Kody M. Sparks, Esquire, Buchanan Ingersoll & Rooney PC, Wilmington, Delaware; Ekwan E. Rhow, Esquire (argued), Timothy B. Yoo, Esquire, Kate S. Shin, Esquire, Alexander H. Tran, Esquire, Bird, Marella, Boxer, Wolpert, Nessim, Drooks, Lincenberg & Rhow, P.C., Los Angeles, California; for Plaintiff Below, William West.

Jody C. Barillare, Esquire, Amy M. Dudash, Esquire, Morgan, Lewis & Bockius LLP, Wilmington, Delaware; Michael L. Banks, Esquire (argued), Vishal H. Shah, Esquire, Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania; for Defendant Below, Appellee Access Control Related Enterprises, LLC, LLR Equity Partners, IV, LLP, LLR Equity Partners Parallel IV, L.P., Seth Lehr, David Stienes, Greg Case, Robert Cheftiz, and Joseph Grillo.

2 SEITZ, Chief Justice:

William West, the founder of Access Control Related Enterprises, LLC

(“ACRE”), was forced out as an officer of the company by its majority owners, LLR

Equity Partners, IV, L.P. and LLR Equity Partners Parallel IV, L.P. (collectively,

“LLR”). He responded by filing a wrongful termination suit against ACRE and

others in California state court. The California court stayed the case based on the

forum selection provisions in the controlling agreements that designated Delaware

as the exclusive forum for disputes arising out of the agreements. After a failed

detour to Delaware District Court, West filed the same claims in the Delaware

Superior Court.

At first, the Superior Court ordered that the case be transferred to the Court of

Chancery because the latter had exclusive jurisdiction over West’s breach of

fiduciary duty claim. In response, West chose not to transfer the case, withdrew his

breach of fiduciary duty claim, and persuaded the California court to lift the stay.

The Superior Court then reversed course and decided to continue exercising

jurisdiction over the case. It also denied West’s multiple motions to dismiss the

Delaware case in favor of the California litigation. After more motion practice by

both sides, a Delaware jury eventually found against West on his breach of contract

claim.

3 West has not appealed the jury’s adverse verdict. Instead, he seeks to undo

his loss in Delaware by challenging the Superior Court’s procedural rulings. First,

he argues that the Superior Court no longer had jurisdiction once it issued the order

transferring the case to the Court of Chancery. According to West, the court’s

unprompted decision to continue to exercise jurisdiction was improper. Second, he

claims that the Superior Court improperly denied his motions for voluntary

dismissal. And third, he believes that if the Superior Court had applied forum non

conveniens, it would have dismissed the Delaware case in favor of the California

litigation.

We affirm the Superior Court’s decision to keep the dispute in Delaware. The

Superior Court did not lose jurisdiction when it issued the transfer order. The

transfer never occurred because West did not take the steps to effectuate the transfer

to the Court of Chancery. Also, the court did not exceed its broad discretion when

it denied West’s motions to dismiss. And forum non conveniens does not apply

when the parties have contracted for a specific forum to resolve their disputes.

I.

A.

In 2012, West, a California resident, co-founded ACRE, a Delaware limited

liability company. A year later, two Delaware limited partnerships – LLR Equity

Partners, IV, L.P. and LLR Equity Partners Parallel IV, L.P. – became ACRE’s

4 majority owners and controlled its board. The LLR-controlled board appointed West

ACRE’s Chief Financial Officer and Chief Operating Officer. The parties entered

into eight agreements, four of which designated a state or federal court in Delaware

as the exclusive forum to resolve disputes among the parties.1 The Securityholders’

Agreement and LLC Agreement both designated the Court of Chancery and any

federal court in Delaware for dispute resolution, while the Severance Agreement and

Noncompetition Agreement both designated any federal or state court in Delaware.

The Securityholders’ Agreement also covered the rights and obligations of ACRE’s

securities, and the Severance Agreement governed the employment relationships.

The four other agreements either contained no forum selection provision or had a

non-Delaware forum selection provision. Three of the agreements provided the

grounds under which West could be terminated as an ACRE employee.

The parties’ relationship deteriorated for reasons not relevant to our decision,

which led ACRE’s LLR-controlled board to terminate West for cause as ACRE’s

CFO and COO. In 2016, West filed suit in the Los Angeles Superior Court against

LLR and claimed wrongful termination, conversion, and breach of fiduciary duty,

1 App. to Opening Br. at A821-33 (Equity Incentive Plan); A834-44 (Noncompetition Agreement); A917-76 (Securityholders’ Agreement); A980-84 (Equity Award Agreement); A1124-30 (Severance Agreement); A1147-99 (LLC Agreement); A2587-639 (Contribution and Purchase Agreement); A2768-92 (Securities Purchase Agreement). 5 and sought declaratory relief.2 LLR responded by moving to dismiss or stay the

action.3 The Los Angeles Superior Court granted the motion and stayed the case

based on the forum selection provisions in the agreements.4

B.

In August 2017, West brought the same claims in the United States District

Court for the District of Delaware. The District Court dismissed the action for lack

of diversity jurisdiction. A few months later, West filed again in the Delaware

Superior Court and added a breach of contract claim.5 LLR moved to dismiss the

case for lack of jurisdiction, or alternatively, asked the Superior Court to transfer the

case to the Court of Chancery to decide West’s equitable breach of fiduciary duty

claim. The Delaware Superior Court granted the motion and permitted West to

transfer the case to the Court of Chancery.6 As the court reasoned, the Court of

Chancery could exercise jurisdiction over the legal and equitable claims.

West chose not to take the steps necessary to transfer the case and instead

voluntarily dismissed his breach of fiduciary duty claim.7 He then moved to amend

his complaint by dropping the breach of fiduciary duty claim and adding three new

2 Id. at A859-63 (West’s original complaint filed with the Los Angeles Superior Court). The Defendants also included ACRE and affiliates of ACRE and LLR. They will be referred to collectively as LLR. 3 Id. at A515 (Los Angeles Superior Court May 2, 2017 Order). 4 Id. at A514-25 (Los Angeles Superior Court May 2, 2017 Order). 5 Id. at A631-62 (West’s original complaint filed with the Delaware Superior Court). 6 Id. at A738 (Delaware Superior Court’s June 2018 Order). 7 Id.

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